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BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

Application of

CHINA SOUTHERN AIRLINES COMPANY LIMITED

for an exemption pursuant to 49 U.S.C. § 40109 and for

an amended foreign air carrier permit pursuant to

49 U.S.C. § 41301 (Guangzhou/Wuhan-San Francisco)

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Docket DOT-OST-1996-2008

APPLICATION OF CHINA SOUTHERN AIRLINES COMPANY LIMITED

FOR AN EXEMPTION AND AN AMENDED FOREIGN AIR CARRIER PERMIT

Communications with respect to this document should be addressed to:

Lu Wei Xi

Senior Vice President – The Americas

China Southern Airlines Co. Ltd.

Los Angeles Office

8300 Wilshire Boulevard

Suite 101

Los Angeles, CA 90048

Telephone: +1 323 653 8088

Facsimile: +1 323 653 8066

George U. Carneal

HOGAN LOVELLS US LLP

Columbia Square

555 Thirteenth Street, NW

Washington, D.C. 20004

Telephone: +1 202 637 6546

Facsimile: +1 202 637 5910

E-mail: george.carneal@hoganlovells.com

Counsel for

CHINA SOUTHERN AIRLINES

COMPANY LIMITED

October 10, 2014

NOTICE: Any person may support or oppose this application by filing an answer

and serving a copy of that answer on counsel for China Southern Airlines

Company Limited and all persons served with this application. Answers

to the exemption request are due October 27, 2014, and answers to the

permit request are due October 31, 2014. However, Counsel for China

Southern intends to poll the U.S. air carrier representatives listed

on the attached service list to confirm that there are no objections

to this application in advance of those dates.
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BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

Application of

CHINA SOUTHERN AIRLINES COMPANY LIMITED

for an exemption pursuant to 49 U.S.C. § 40109 and for

an amended foreign air carrier permit pursuant to

49 U.S.C. § 41301 (Guangzhou/Wuhan-San Francisco)

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)

)

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)

)

)

Docket DOT-OST-1996-2008

October 10, 2014

APPLICATION OF CHINA SOUTHERN AIRLINES COMPANY LIMITED

FOR AN EXEMPTION AND AN AMENDED FOREIGN AIR CARRIER PERMIT

China Southern Airlines Company Limited (“China Southern”) hereby applies

under 49 U.S.C. §§ 41301, 41302 and 40109, Subparts B and C of the Department’s

Rules of Practice (14 C.F.R §§ 302.201 and 302.301, et seq.), Part 211 of the

Department’s Economic Regulations (14 C.F.R. Part 211), and the Department’s

August 23, 2005 Notice in Docket DOT-OST-2005-22228 (the “Streamlined Licensing

Procedures Notice”) for exemption authority and an amended foreign air carrier permit

authorizing China Southern to engage in scheduled foreign air transportation of persons,

property, and mail between Guangzhou (CAN) and Wuhan (WUH), People’s Republic of

China (“PRC”), on the one hand, and San Francisco, CA (SFO), on the other hand.

China Southern seeks such authority to introduce scheduled service on the CAN-WUHSFO route on December 16, 2014. China Southern requests immediate consideration

of this application and will be polling the U.S. air carriers served with this application to

help facilitate prompt DOT approval.

Pursuant to the show-cause procedures described in the Streamlined Licensing

Procedures Notice, China Southern requests issuance of an Order (a) approving an
Application of China Southern Airlines

(Guangzhou/Wuhan-San Francisco)

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exemption to authorize the scheduled Guangzhou/Wuhan-San Francisco services

specified above for a period of one year, or until the effective date of China Southern’s

final amended foreign air carrier permit, whichever occurs first, and (b) tentatively

awarding an amended foreign air carrier permit to China Southern adding the

CAN/WUH-SFO route. As soon as possible thereafter, China Southern requests that

the Department release a Final Order issuing China Southern its amended foreign air

carrier permit authorizing scheduled CAN/WUH-SFO services for a period of indefinite

duration.

Notably, with the introduction of CAN-WUH-SFO flights, China Southern

proposes to open up Wuhan as a new Chinese gateway for non-stop service to the

United States. It would represent the first-ever combination service by a Chinese air

carrier between an interior mainland PRC city and the U.S. mainland (whereas, up until

now, Beijing, Shanghai and Guangzhou have been the exclusive passenger service

gateway points within mainland China). This new service would also establish

San Francisco as China Southern’s third combination service destination in the

United States. China Southern’s new flights would link San Francisco not only with

central China via Wuhan, but also with China Southern’s main Guangzhou hub on a

one-stop basis, creating multiple new connecting opportunities that will bring substantial

benefits to travelers.

In further support of this application, China Southern submits the following

information:

1. China Southern is a well-known and well-established air carrier of the

PRC. Its principal office and primary hub are located at Baiyun International Airport,

Guangzhou, PRC. With a fleet of over 600 aircraft and service to over 200 global
Application of China Southern Airlines

(Guangzhou/Wuhan-San Francisco)

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destinations, China Southern ranks as the largest Asian air carrier in terms of

passengers carried, and is among the 10 largest airlines in the world.

2. China Southern currently holds a DOT foreign air carrier permit that

authorizes it to provide: (a) scheduled foreign air transportation of persons, property,

and mail between (i) Guangzhou, PRC and the terminal point Los Angeles, CA, and

(ii) Guangzhou, PRC and New York, NY; (b) scheduled foreign air transportation of

property and mail between Shenzhen, PRC and the coterminal points Anchorage, AK

and Chicago, IL; and (c) charter foreign air transportation, subject to the prior approval

requirements of Section 212.9(e) of the Department’s regulations. 1/ China Southern

also holds exemptions authorizing it to engage in: (a) scheduled foreign air

transportation of persons, property, and mail between points in the PRC and points in

the United States, via intermediate points, and beyond, on a code-share basis with any

authorized U.S. air carrier; 2/ and (b) scheduled foreign air transportation of property and

mail between any point or points in the PRC and any point or points in the United States

open to scheduled service, via intermediate points and beyond to any points outside the

United States. 3/

3. Pursuant to its existing DOT economic authority, China Southern

operates scheduled passenger flights between its Guangzhou hub and Los Angeles, a

service it has provided since 1997, and between Guangzhou and New York, a service it

introduced just this past summer. China Southern also conducts freighter service

1/ DOT Order 2014-8-21.

2/ DOT Notice of Action Taken dated November 7, 2013 (Docket DOT-OST-1999-5031).

3/ DOT Notice of Action Taken dated April 15, 2010 (Docket DOT-OST-2010-0047) (timely

renewal application dated April 6, 2011 pending).
Application of China Southern Airlines

(Guangzhou/Wuhan-San Francisco)

Page 4

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between Shanghai and Chicago via Anchorage, and between Shanghai, Guangzhou,

Qingdao and Zhengzhou, on the one hand, and Los Angeles on the other hand.

China Southern is seeking expedited DOT approval of an exemption and subsequent

issuance of an amended foreign air carrier permit to enable it to introduce passenger

service on the Guangzhou-Wuhan-San Francisco route on December 16, 2014.

4. China Southern is unquestionably fit, willing, and able to provide the

scheduled foreign air transportation described in this application. Upon issuing

China Southern its initial foreign air carrier permit in 2001 and on numerous occasions

since then, the Department has determined that China Southern is operationally and

financially fit to engage in scheduled and charter foreign air transportation, and

China Southern remains so qualified. See DOT Orders 2001-11-4 and 2014-6-2 and

Notices of Action Taken in Dockets DOT-OST-2004-18727, DOT-OST-2003-16786,

DOT-OST-2002-12655 and DOT-OST-1999-5031. China Southern requests, pursuant

to Rule 24(g) of the Department’s Rules of Practice, that the Department take official

notice of the relevant facts in these dockets and otherwise on file with the Department to

support approval of this permit amendment/exemption application.

5. In support of its application for issuance of an amended foreign air carrier

permit (and interim exemption) authorizing scheduled Guangzhou/WuhanSan Francisco passenger air transportation, China Southern hereby incorporates by

reference the updated and additional fitness information that was set forth in its

Application for an Exemption and Amended Foreign Air Carrier Permit filed in Docket

DOT-OST-1996-2008 on May 21, 2014. Except as noted below, the information

contained in that recent Application pertaining to 14 C.F.R. §§ 211.20(a), (b), (e), (f), (i),

(n), (o) and (s) remains substantially unchanged. China Southern provides the following
Application of China Southern Airlines

(Guangzhou/Wuhan-San Francisco)

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additional information required under 14 C.F.R. § 211.21 in support of this instant

Application:

§ 211.20(c) & (p) Statement of the additional authority requested, a description

of the new services proposed, and an estimate showing the

total traffic and financial results of the new services for the first

full year of normal operations.

China Southern is seeking DOT exemption authority and subsequent

issuance of an amended foreign air carrier permit under the Department’s

streamlining procedures to authorize China Southern to provide scheduled

foreign air transportation of persons, property, and mail between Guangzhou and

Wuhan, People’s Republic of China, on the one hand, and San Francisco, CA,

on the other hand. Such authority is available to Chinese air carriers under the

U.S.-PRC Agreement Relating to Civil Air Transport, signed September 17,

1980, as amended (“U.S.-PRC Agreement”).

Pursuant to the requested exemption and amended permit authority,

China Southern plans to introduce year-round scheduled one-stop Guangzhou

(CAN) - Wuhan (WUH) - San Francisco (SFO) service effective December 16,

2014, using recently-delivered Boeing 787-8 aircraft. China Southern’s B-787-8

aircraft are configured with 228 seats in three classes (4 First Class, 24 Business

Class, and 200 Economy Class). China Southern has a substantial fleet of other

long-range aircraft, including Airbus 380s and Boeing 777s, and reserves the

right to use other equipment on the CAN-WUH-SFO route if warranted.

China Southern has been advised that the Transportation Security

Administration (TSA) has assessed WUH under TSA’s Foreign Airports

Assessment Program. Therefore, China Southern anticipates that it will be able
Application of China Southern Airlines

(Guangzhou/Wuhan-San Francisco)

Page 6

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to use WUH as a Last Point of Departure to the United States, subject to

meeting TSA’s other security requirements.

China Southern initially intends to offer 3 weekly CAN-WUH-SFO flights

(on Tue./Thu./Sat.), but the frequency may change based on seasonality, market

and fleet considerations. The initially proposed CAN-WUH-SFO schedule for the

winter season is as follows (all times local):

Flight # Dep. Arr. Dep. Arr.

CZ659 1130 CAN – WUH 1315 1445 WUH – SFO 1055 **

CZ660 1255 SFO – WUH 1855/+1 2025 WUH – CAN 2210

** Arrival/departure times at SFO one hour later during Daylight Saving Time.

China Southern reserves the right to modify its CAN/WUH-SFO schedule and

service pattern, subject to applicable frequency limitations under the U.S.-PRC

Agreement.

Based on its substantial international air transportation experience and its

analysis of demand and expected growth in the market, China Southern

reasonably projects that it will carry approximately 60,000 passengers between

Guangzhou/Wuhan and San Francisco during the first year of operations and the

route will generate income of approximately $54 million during that period.

§ 211.20(d) Updated Officer information.

China Southern remains effectively controlled by Chinese citizens. The

only change to the list of directors and senior officers set forth as Exhibit CSN-1

to its May 21, 2014 Application is the addition of Mr. Feng Hua Nan as COO

Flight Safety of the Company, since August 2014. Mr. Feng is a PRC citizen.
Application of China Southern Airlines

(Guangzhou/Wuhan-San Francisco)

Page 7

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§ 211.20(i) Evidence of the Applicant’s homeland operating authority.

Enclosed as Exhibit WUH-1 is an authorization issued by CAAC

permitting China Southern to provide scheduled service on the GuangzhouWuhan-San Francisco route (with an informal English translation).

§ 211.20(q) Authorization under the civil air transport agreement between the

United States and the People’s Republic of China.

The PRC may designate an unlimited number of airlines to operate

combination and all-cargo services under the U.S.-PRC Agreement, and

China Southern has been so designated for many years. Under Annex I,

Section II.A of the Agreement, designated Chinese airlines may operate

combination services “[f]rom any point or points in the People’s Republic of

China, via Tokyo or another point in Japan, to any point or points in the

United States open to scheduled international services.” In terms of the

proposed nonstop services between Wuhan and San Francisco, Wuhan is the

capital of Hubei province, which is an area within China Zone 3 and the WUHSFO flights are thus not subject to any frequency limitations under Annex V,

paragraph (6), of the U.S.-PRC Agreement. In the event a decision is made to

adjust the service pattern so that CAN-SFO is the nonstop segment, the service

would equally be authorized within the Annex V frequency limitations.

Consequently, issuance of the requested exemption authority and amended

foreign air carrier permit for the Guangzhou/Wuhan-San Francisco route is

entirely consistent with the U.S.-PRC Agreement (constituting prima facie

evidence that approval of this application is in the public interest).
Application of China Southern Airlines

(Guangzhou/Wuhan-San Francisco)

Page 8

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6. The introduction of the scheduled CAN-WUH-SFO services contemplated

by China Southern will not involve a near-term net annual change in aircraft fuel

consumption exceeding 10 million gallons, meaning approval of this application would

not constitute a “major regulatory action” under the Energy Policy and Conservation Act,

as implemented by 14 C.F.R. Part 313. According to China Southern’s estimates, the

fuel burn for its first year of Boeing 787-8 PRC-San Francisco roundtrip services will

total approximately 7.436 million gallons. China Southern does not anticipate

encountering any difficulty in obtaining adequate supplies of fuel for its proposed

services from existing sources. Moreover, China Southern believes that the public

benefits of convenient and competitive new services between China and San Francisco,

including the establishment of Wuhan as a new Chinese gateway and San Francisco as

a new U.S. terminal point for China Southern, warrant and offset any increased fuel

consumption that, by necessity, will accompany the introduction of such long-haul air

services.

7. In conclusion, China Southern is eager and well-qualified to introduce

valuable, competitive and convenient scheduled air transportation between

Guangzhou/Wuhan and San Francisco, which is consistent with the U.S.-PRC

Agreement. Approval of this application would be consistent with the Department’s

standards for issuance of scheduled authority to foreign air carriers, and is in the public

interest.

Application of China Southern Airlines

(Guangzhou/Wuhan-San Francisco)

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EXHIBIT LIST

Exhibit

WUH-1 Guangzhou-Wuhan-San Francisco Authorization

WUH-2 Verification
Application of China Southern Airlines

(Guangzhou/Wuhan-San Francisco)

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Exhibit WUH-1

Guangzhou-Wuhan-San Francisco Authorization
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[Informal Translation]

Civil Aviation Administration of China

No. Juneixu[2014]129

Operation Authorization for Guangzhou-Wuhan-San Francisco

Round Trip Flights

China Southern Airlines Company Limited,

The Civil Aviation Administration of China (CAAC) has scrutinized The

Request for Launching Guangzhou-Wuhan-San Francisco International

Round Trip Flights (No. Nanhanggu[2014]274) issued by your company.

In accordance with the Agreement Between the Government of the

United States of America and the Government of the People's Republic of

China Relating to Civil Air Transport and the Protocol to this Agreement,

which were signed by the Chinese and the U.S. governments, the CAAC

agrees that your company operate mixed passenger and cargo flights on

the route Guangzhou-Wuhan-San Francisco and vice versa under the

operation terms of the above mentioned Agreement and Protocol and in

accordance with the air route, aircraft type, frequency and slots approved

by the CAAC.

It is requested that your company submit detailed flight schedules for

approval, and operate the flights in accordance with the approved launch

date, air route, aircraft type, frequency and slots.

This operation authorization becomes effective as of the date of issue,

and will not expire until further noticed by the CAAC.

Civil Aviation Administration of China

September 22, 2014
Application of China Southern Airlines

(Guangzhou/Wuhan-San Francisco)

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Exhibit WUH-2

Verification

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CERTIFICATE OF SERVICE

I hereby certify that a copy of the foregoing Application of China Southern

Airlines Company Limited for an Exemption and an Amended Foreign Air Carrier Permit

has been served this 10th day of October, 2014, on the following addressees:

robert.wirick@aa.com; howard.kass@aa.com

sascha.vanderbellen@delta.com; chris.walker@delta.com

gbleopard@fedex.com; sllunsford@fedex.com

jhill@cooley.com; perkmann@cooley.com

matwood@cozen.com

kevin.montgomery@polaraircargo.com

agoerlich@ggh-airlaw.com

dan.weiss@united.com; steve.morrissey@united.com

anita.mosner@hklaw.com

englets@state.gov

John.S.Duncan@faa.gov

David.E.Henthorn@faa.gov

rob.hawks@faa.gov

brian.ctr.meehan@faa.gov

thomas.keene@tsa.dhs.gov

Kandace.Bender@flysfo.com

Jonathan Echmalian